International Trade Operations - Free and Fair Trade - Essay Example

PART FREE TRADE: Free trade is the phenomenon which is being supported by the increasing globalization. Free trade means that all countries and economies should be able to trade with each other freely without any trade restrictions. The trade restrictions include traffic, taxes, duties, trade quotas, etc. Globalization has resulted in integrating all economies, which in turn results in liberalized trade. Hence, free trade can be defined as the opening up or integrating the economies in order to support the trade liberalization (Fridell, 2010). In free trade the products, information, labor, and capital flow easily between the countries and there are no trade barriers. Different countries enter into free trade agreements and there are different international trade organizations which support and promote free trade. Different school of thoughts have different perceptions and viewpoints about the free trade. According to one school of thought it is beneficial for overall growth and development of the different countries of the world. On the other hand, according to the second school of thought free trade is only beneficial for the developed and rich countries (Fridell, 2010). The supporters of the free trade are of the view point that it results in increasing competition and thus lower the prices. Apart from this, it results in increasing innovation and new products because of the competition. The domestic companies no more have monopoly in the market because of the government support like subsidies and quotas (Fridell, 2010). However, the critics of the free trade promote the view point that free trade results in destroying the local industry. Also, the benefits are only reaped by the large countries and organizations. FAIR TRADE: Fair trade means that the organizations indulge in trade by paying the legal and fair prices to the producers of the goods in different developing countries. The concept of fair trade is being promoted in order to make sure that all producers are paid the appropriate price for their hard work. Fair trade results in equity in international trade and works for the development of appropriate trading and working conditions in developing countries (Archer & Fritsch, 2010). The concept of fair trade generated from the fact that in some developing countries the working conditions are not appropriate and producers are ready to sell their products at low costs. This in turn results in damaging the working conditions more and benefits the organizations buying the products at low costs (Archer & Fritsch, 2010). For this purpose there are fair trade certifications. These certifications make sure that the products being traded are produced keep in consideration the standards and regulations regarding labor, environment, and development. There has been growing concern among the people regarding the fair trade. Different organizations and institutions are demanding from the companies to make sure that they indulge in fair trade. The consumers are also banning and avoiding organizations which are not involved in fair trade (Archer & Fritsch, 2010). DIFFERENCE BETWEEN FREE TRADE AND FAIR TRADE: There is clear different between free trade and fair trade. Free trade promotes the idea of removing all trade restrictions and facilitating the process of easy and free trade among different countries and economies. On the other hand the fair trade means to make sure that the product being imported by the organization or country has been produced according to all standards and regulations and organization has paid fairly for it (Stencel, 2008). PRODUCTS BEING FAIRLY TRADED: Different products are covered by the fair trade agreement and certification. Some of the these includes different agricultural, manufactures, and composite items like bananas, coffee, cotton, cocoa, flowers, honey, juices, spice and herbs, tea, sugar, wine, fresh fruits, sport balls, wine, etc (International Trade Centre, 2011). Milk and milk products come under the fair trade legislation if the animals who are used for producing milk are organically treated in order to increase the production of the milk. The products which are fairly traded are marketed and traded either by the MEDC supply chain or through fair trade product certification. In the MEDC supply chain the fair trade products are imported through the fair trade organizations. On the other hand in the fair trade product certification the products are given the certificate that these products have fulfilled all requirements and have been produced according to the standards and regulations (Archer & Fritsch, 2010). CORPORATE MANAGEMENT STRATEGIES: Multinational Organizations have been using different strategies and methods in order to make sure that they are able to capture considerable market share in the international market. Some of the strategies in this regard are: Think local, act local Think global, act global Think global, act local The preferred corporate management strategy of most of the Multinational Corporations (MNCs) is ‘Think global, act local’. This strategy demands the organization to take decisions keeping in mind the international growth strategy and at the same time the local practices and cultures. Owing to increasing globalization and free trade there has been serious diversity issues in the organizations. The management of organization should be able to integrate the different cultures and practices into the organizational culture in order to cope up with the issue of the diversity. The strategy of ‘think global, act local’ allows the organizations to expand in different geographical markets while responding to their different needs and demands. It is important to consider that every geographical region have specific culture, values, practices, needs, and demands. The organizations planning to enter into international market should be able to keep in consideration all these local needs and demands (Markman & Dyczewski, 2010). REFERENCES Archer, C., & Fritsch, S. (2010). ‘Global fair trade: Humanizing globalization and reintroducing the normative to international political economy.’ Review of International Political Economy, 17(1), 103-128. Fridell, G. (2010). ‘Fair Trade, Free Trade, and the State.’ New Political Economy, 15(3), 457-470. International Trade Centre. (2011). Fair trade International – FLO. Retrieved March 8, 2012, from Markman, K., & Dyczewski, E. (2010). ‘Think and Act Global and Local: A Portrait of the Individual as a Flexible Information-Processor.’ Psychological Inquiry: An International Journal for the Advancement of Psychological Theory, 21(3), 239-241. Stencel, J. (2008). ‘Free Trade Versus Fair Trade.’ Denv. J. Int’L. & Pol’y, 36(3/4), 349-367. Retrieved March 8, 2012, from PART 2 U.S TRADE POLICY AND PROTECTIONISM: United States have been always supportive towards international trade and promote such trade policies which in turn results in the process of increasing the trade. However, recently there have been serious criticism on the part of different people and protectionist regarding the free trade policy of United States. According to these people, the increasing international and free trade is resulting in destroying the job market in United States and the unemployment level is increasing. Most of the job in the United States are being outsourced to other countries like India and China, which in turn is increasing the local unemployment level and is damaging the economy (Williford, 2011). The protectionism tends to protect the local industry and economy. With the help of protectionist policies the government is trying to induce economic growth in the country. As, the government of Unites States decided to restrict the outsourcing of jobs to other countries. Recently, the government of United States under the leadership of Barack Obama imposed the policy that the companies who are outsourcing the jobs to other countries will have to pay more taxes as compared to the companies who are providing jobs to the local people (PTI, 2012). Although trade protection tends to protect the local industries but in long run it has negative impact on the economy of the country. If there will no free trade the local industry will have monopoly and will charge additional prices leading to inflation. Apart from this the investment from international organizations result in creating more jobs opportunities in the country. There should be a balance between the free trade and trade protection in order to make sure that there are maximum economical benefits for the company. REFERENCES PTI. (2012). ‘Protectionism to hurt both US and India, warns Pranab Mukherjee.’ The Economic Times. Retrieved March 7, 2012, from Williford, S. (2011). ‘Outsourcing Is the Problem, Protectionism is the Solution.’ Economy In Crisis. Retrieved March 7, 2012, from Read More